ECB cuts key interest rates: reaction

In Mario Draghi's first week at the helm of the European Central Bank, he has
slashed the main interest rate from 1.5pc to 1.25pc. We bring you some
reaction to the rate changes.

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Mario Draghi has slashed the main interest rate from 1.5pc to 1.25pc.Photo: Reuters

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Previous European Central Bank head Jean-Claude Trichet, right, listens to Mario Draghi, who took over on Monday.Photo: AP

1:06PM GMT 03 Nov 2011

Brian Dolan, chief strategist, Forex.com

This is a bit of a surprise but it was not entirely out of the question that they would cut rates. Some people thought Draghi would not want to appear too dovish at his first meeting. But certainly the economic fundamentals justify it. Europe appears to be on the verge of recession.

Coupled with the chance we won't have a Greek referendum, I think this will be encouraging for risk appetite. It shows the ECB is being flexible, not sticking blinding to an inflation mandate at a time like this. And if Greece doesn't have a referendum, it opens the door to their getting the aid package. If the euro can get above $1.3860 or so, that could open the way for more gains.

Natalia Aguirre, research director, Renta 4 Brokerage

There's no doubt it's good for all of the heavily indebted economies such as Spain. Now we just need it to be transferred to the Euribor review. The markets right now needed help from every side.

This is a response to the weakening European economy. There is not a situation to further roil the market given the situation in Greece. They are in a situation that makes conforming to a pure inflation target a charade.

Annalisa Piazza, Strategist, Newedge Strategy

Although the cut is fully justified by the current market and economic conditions, the move is a real surprise, given that the September press conference didn't prepare the ground for an imminent rate cut.

The recent development in Greece, uncertainties about the EU package implementation and risks of spill-over effects to other EMU countries (i.e. Italy) have probably convinced the new ECB president Draghi (and the rest of the GC) that it was now time for the ECB to come in and try to rescue the EMU economy.